India Unveils New Norms For Hydrocarbons Licensing, Pricing

NEW DELHI: Taking up some long-pending issues in the oil and gas space, India on Thursday approved a new policy for their exploration, and defined the pricing norms for existing and new discoveries made in difficult areas. Contracts for 28 old blocks were also extended.

Briefing the media on the decisions of a cabinet meeting presided over by Prime Minister Narendra Modi, Petroleum Minister Dharmendra Pradhan said the new oil and gas exploration policy will now be based on a revenue-sharing model, as opposed to cost-and-output-based norms earlier.

The difficult areas for which the new pricing norms have now been formulated are defined as those from deep-water, ultra deep-water and high-pressure, high-temperature areas. Such areas were not considered when prices were fixed for normal gas discoveries in October 2014.

The bulk of such fields are with Reliance Industries and state-run Oil and Natural Gas Corp.

What could impact the discovered oil fields of Reliance Industries is a clause that says if there are pending arbitration or litigation cases pertaining to such assets, the new policy shall only become applicable upon the conclusion or withdrawal of legal proceedings.

The decision had an impact on the shares of Reliance Industries. They steadily fell during the day -- from 1,045 to 1,012, to log a loss of 2.87 percent. The company said it will await the fine print before reacting.

The shares of ONGC closed higher by 0.29 percent at 205.70.

On difficult discoveries, an official statement later said the price will be calculated once in six months. The government feels this could potentially monetise 28 discoveries and also lead to some major investment. Reserves associated with such blocks are valued at $28.35 billion.

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